OPEC Says Biofuels Could Make it Rethink Investment
Date: 10-May-07
Country: BELGIUM
Author: Jeff Mason
The European Union and nations around the world are looking at biofuels, made from plant and animal matter, to boost energy security, reduce greenhouse gas emissions and open new markets for farmers.
"We have great concerns about this ... about policies which discriminate against oil," Fuad Siala, alternative energy sources analyst at the Organization of the Petroleum Exporting Countries, said at a Hart energy conference in Brussels.
"We have legitimate concerns to revisit our investment plans," he said.
Though Siala said biofuels were not necessarily a big competitor for crude oil, OPEC was concerned they could replace a significant portion of its projected output in coming years.
"In 2030 our projections say that OPEC will be called upon to produce about 49 million barrels (of oil) per day," he said.
"By that time if biofuels are able to supply 5 million barrels per day, that's 10 percent of the quota on OPEC oil. That is significant."
The 27-nation EU has set a binding target for biofuels to make up 10 percent of vehicle fuels by 2020.
Siala said there were more "downside risks" than "upside potential" for oil demand despite rapid industrialisation in emerging countries such as India and China.
"Security of supply and security of demand are two sides of the same coin. Without the confidence that demand will emerge, the incentive to undertake upstream investments can be reduced."
OPEC, which has 12 members, produces about a third of the world's oil.
Russia, the EU's biggest energy supplier and not an OPEC member, has also cited security of demand as a key concern even as EU reliance on Russian gas is projected to grow.
The bloc is working to diversify energy supplies, agreeing to increase consumption dramatically from renewable sources such as wind and solar and to lower energy usage as a whole.
OPEC's Siala said other measures could be used to fight climate change such as carbon capture and storage technology.
"There are options which do not cause huge dislocation of the current energy system," he said.